Court-Appointed Neutral Economic Experts

I. INTRODUCTION

Complex civil litigation routinely includes expert economic testimony. However, determining which expert economist is more credible may confound a lay jury. It may even confound the judge when ruling on the admissibility of expert economic testimony during the Daubert hearing.1 One solution rarely employed is for the court to appoint its own neutral economic expert under Rule 706 of the Federal Rules of Evidence2 when a lawsuit contains a claim for damages that will require rigorous analysis of data. Based on my recent experience as Judge Richard Posner's court-appointed neutral economic expert on damages in patent infringement litigation, I explain in this article how the wider use of Rule 706 would assist the judge and jury and would facilitate the prompt settlement of intellectual property, antitrust, securities, contract, business tort, and other complex disputes.3 The benefits to courts and litigants would surely exceed the costs.

Before allowing an expert to testify before the jury, a trial judge must determine (among other things) in a Daubert hearing "that an expert, whether basing testimony upon professional studies or personal experience, employs in the courtroom the same level of intellectual rigor that characterizes the practice of an expert in the relevant field."4 Although the judge may crossexamine the expert during the Daubert hearing to make this determination, his decision to admit or exclude part or all of the expert's testimony may prove difficult to the extent it requires the judge to have specialized knowledge of the expert's field. It is true that, if each side has an expert, the party opposing expert A will use expert B, written authorities, expert A's own writings and prior testimony, and factual evidence of various kinds to show that A has not satisfied Daubert's requirements for admissibility. Out of an abundance of caution, however, the judge may be tempted to admit the expert's testimony in the face of Daubert challenges and wait for cross-examination at trial to expose the alleged errors in the expert's testimony.

Justice Stephen Breyer and Judge Posner believe that an effective way for the trial judge to determine the admissibility of expert testimony before cross-examination at trial is for the judge to appoint his own neutral expert pursuant to Rule 706.5 I agree and in this article examine the benefits that would result from wider use of court-appointed economic experts pursuant to Rule 706. My insights draw from my experience in 2012 and 2013 as the nominee of Judge Posner (sitting by designation as a trial judge in the Northern District of Illinois) to be his neutral economic expert on damages in two patent litigations-Apple v. Motorola6 and Brandeis University v. East Side Oven7-and my actual service as his neutral expert in the latter case.

In Part II of this article, I explain how Rule 706 works in both theory and practice. In Part III, I explain how the wider use of court-appointed neutral economic experts would promote the efficient administration of justice. In addition to advising the judge on the admissibility of the parties' opposing economic experts, the court's neutral economic expert can provide testimony that will enable the jurors to better understand the contradictory testimony of opposing experts. A neutral economic expert on damages (or other remedies) is categorically different from a neutral scientific expert on liability questions, and for this reason a court's use of a neutral economic expert generates special value. The need to determine proper monetary relief using sophisticated economic analysis of data arises in a high percentage of complex civil cases involving business disputes.8 In this respect, a court's appointment of a neutral economic expert recognizes at a very practical level the complementarity between law and economics. In a lawsuit both disciplines help the court to determine what monetary relief would be most consistent with the applicable law. In Part IV, I conclude by offering several conjectures on the use of neutral economic experts.

II. THE EXPERIENCE WITH NEUTRAL EXPERTS IN COMPLEX
LITIGATION

J. Gregory Sidak is an Expert Economist in the fields of Antitrust, Telecommunications Regulation, Commercial and Investment Arbitration, and Intellectual Property Law. Prof. Sidak is the Ronald Coase Professor of Law & Economics at Tilburg University and the Chief Economic Expert at Criterion Economics in Washington, DC. The focus of his research has been regulation of network industries, antitrust policy, the Internet and electronic commerce, intellectual property, and constitutional law issues concerning economic regulation.